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The health care sector is a dominating force for future economic growth in major metropolitan areas across the country, despite the industry's seemingly weakened state, according to a study from the Milken Institute.
Based on employment levels, Los Angeles ranks No. 5 out of 20 cities nationwide that have the greatest investment potential in the health care industry, according to the study released Monday. Longer life spans and a burgeoning elderly population are two factors that are contributing to future growth in the sector.
Right now, the health care industry is growing quite rapidly, ... especially as people try to retain their youth and increase their physical activity,'' said Ross DeVol, Milken Institute's director of regional economics.We are going to go through something we haven't seen in the past.''
With plastic surgery a popular alternative to the natural aging process and with lavish senior living communities cropping up across the country, DeVol said the health care industry is just beginning to pump money into local economies.
Health care consumption in the U.S. has doubled since 1970, now accounting for 14 percent of the country's gross domestic product. That figure is expected to gain three percentage points by 2011.
In Los Angeles, the health care industry employs 312,300 people, 7.7 percent of the total employment pool. Those jobs range from health care practitioners to employees in the biotechnology sector. The Milken Institute researchers said the anticipated high returns on investment in these areas has the potential to enhance longevity - an aspiration for many baby boomers.
``We're talking about a generation that has accumulated a great deal of wealth,'' DeVol said.
Much of that wealth has been devoted to preventive medicine. Testing for various forms of cancer has become a significant revenue driver, in addition to improving mortality rates. DeVol said many people didn't even consider testing for prostate cancer decades ago because men weren't living past 60.
``But today demand for treatment in this areas is quite different, with many purchasing leading-edge therapies,'' he said.
More baby boomers are also facing the realities of moving their parents into senior living facilities. Demand in this area has bolstered the bottom lines of many companies that cater to the elderly.
Sunrise Assisted Living Inc. recently posted a second-quarter profit of $17.4 million, or 67 cents per share, compared with $12.6 million, or 47 cents a share, a year earlier. The McLean, Va.-based company operates upscale senior living communities, with plans to open a facility in Studio City this spring and Woodland Hills next summer. Sunrise already operates facilities in West Hills and Pacific Palisades.
``We look for sites in top major metros where there is a high population of adult children (baby boomers who may have parents in need of care),'' said Sarah Evers, a spokeswoman for the company.
Sunrise employs more than 30,000 people and has about 360 senior communities either open or under construction in the U.S.
Similarly positioned, privately held Belmont Village is also broadening its reach in Southern California. The company is expected to open a 90,000 square-foot facility this fall in Encino. The company is also working with the University of California, Los Angeles, to create a community-based assessment tool for Alzheimer's.
``We believe the potential for growth and need in Los Angeles is enormous at this moment,'' said Jeff DeBevec, communications director.
(The Los Angeles Daily News web site is at http://www.dailynews.com )
c.2003 Los Angeles Daily News